ValleyWatch

March 28, 2012-By Ken Silverstein in EnergyBiz

Duke Energy's Edwardsport coal plant is costing about three times what Duke said it would cost when it acquired political support for the project in 2004. Coming in at $3.3 billion without Carbon Capture and Sequestration which is said to raise the cost by 50%, the plant has been subject to scandals and numerous dockets before the Indiana Utility Regulatory Commission for which Valley Watch has been an ardent intervener with partners, Save the Valley, Citizens Action Coalition, and Sierra Club, which have sought to stop this polluter which will emit more than 4 million tons of heat trapping CO2 each year it operates. Now Indiana is also forcing Hoosier natural gas consumers to pay a significant premium for coal gas from a proposed plant in Rockport for thirty years that also carries a huge price tag. Similar plants are proposed for Kentucky, and Illinois and just recently a coal to liquids plant was proposed for Newport, IN. It seems that although the rest of the country is finding out that coal synfuels are uneconomic and also pollute, our regional states either do not care about the huge prices they present or are so politically corrupt that their crony capitalism is more important the the economic welfare of their citizens. Photo © 2012 John Blair.

Applying new technologies is admirable. But sticking businesses with huge bills to pay that progress is not. That’s what Exelon and other critics are saying about a proposed plant to convert coal to a synthetic natural gas.

In this particular case, Exelon is taking on Tenaska, which needs Illinois legislators to force the state’s utilities to buy power from its proposed $3.6 billion generator — one that would take coal and gasify it for the purposes of making electricity. Exelon is emphasizing that it is cheaper and easier to just burn the natural gas, noting that its own studies show that the state’s taxpayers would pay heavily for this facility, about 40 percent more than just two years ago.

“It makes absolutely no sense to take coal and make synthetic natural gas out of it,” says Paul Grimmer, chief executive of Eltron Research in Boulder, Colo., a talk with this reporter. “The processes are too expensive. But if you see a huge run-up in natural gas, it may make sense then.”

The developers of that power plant, Tenaska, acknowledge that the current low price of natural gas makes the investment look expensive. But the company goes on to say that such pricing is an anomaly and that over the 40-year lifespan of the investment, the financing would make sense. It is adding that Exelon has a vested interest in stopping construction: Capacity from the unit would be bid into the system and therefore make Exelon’s energy offerings less valuable.

Moreover, Tenaska is saying that older coal-fired power plants are closing and that if coal is to remain viable then modern uses of it must be found. The Illinois state legislature is now debating the issue.

A similar discussion is occurring in the U.S. Congress. Lawmakers from coal-producing states are trying to make the case that the abundance of coal supplies could be used to not just generate electricity but to also make transportation fuels. To their dismay, however, the Obama administration has eliminated funding for such “coal-to-liquids” technologies.

That, in turn, has severely slowed a West Virginia project where such a plant is “underway.” It would be modeled in part after South Africa’s Sasol Co. that now produces about 150,000 barrels a day of oil from coal.

“Last year, when you came before us, you said that the Department of Energy was eager to promote research on coal-to-liquids,” says Senator Joe Manchin, D-WV, at  a recent congressional hearing to Energy Secretary Steven Chu. “Why would you have such a reversal?”

Expensive Process

Let’s answer that question. For starters, the process is expensive and when combined with a global credit crunch, such projects are out-of-reach for all developers — unless the government pitches in.  Continue reading →